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BB presses banks to implement pledge for rate cuts PDF Print E-mail
Friday, 28 March 2008


The Bangladesh Bank is pressing private banks to quickly implement their pledge to lower the rate of interest on bank loans.

Bangladesh Bank governor Dr Salehuddin Ahmed expressed dissatisfaction, saying the quality of services of the banks was far from satisfactory.

Salehuddin made the remark at a meeting with the representatives of the Association of Bankers Bangladesh (ABB), an organisation of the executives of private banks, at the Bangladesh Bank headquarters in Motijheel Thursday.

Besides, the government said the central bank would take necessary initiatives so that the foreign banks also lowered interest rate on loans as far as possible.

After the meeting, the governor told reporters: "The private banks pledged to lower the interest rate on bank loans without decreasing the rate of interest on deposits. The customers now want to know whether the banks have lowered the rate of interest on loans." The meeting discussed the issue.

The bankers said they have started the process of lowering the rate of interest on bank loans. "From the central bank we have urged them to implement it quickly," the governor said.

The governor said that the banks had been asked to submit a report regarding lowering of the interest rate on loans to the central bank by the end of the current month.

ABB chairman and City Bank managing director Kazi Mahmud Sattar said: "The banks have already started the process of lowering the interest rate on bank loans. It will start in full swing in April.

The real reflection will be visible after three months (June)." Sattar said the banks were sincere about implementing their pledges to the central bank regarding lowering of the rate of interest on bank loans.

Expressing serious dissatisfaction over the quality of customer service of the banks, the BB governor said: "Twelve investigation teams from the central bank under cover of customers visited different banks and submitted their reports to the central bank."

"The quality of customer services of the private banks is not good. The bank officials keep the customers standing in queue for long without any reason. They do not talk properly with customers.

They do not change dirty and torn bank notes. In many cases they do not help the customers with adequate information," he said. On customer services, Sattar said: "We admit our weaknesses in this regard. We are trying to improve the quality of customer services. Everything cannot be corrected overnight. It will be okay gradually."

On taking necessary initiatives for lowering the interest rate on bank loans by foreign banks, the Bangladesh Bank governor said: "We will hold meetings with the officials of foreign banks soon and take an honourable decision through discussion."

"At Thursday's meeting the banks were pressed to increase distribution of agricultural loans considering the present situation of the country. At the same time the banks have been told to take necessary initiatives to increase the flow of loan to the small and medium enterprises (SME), women entrepreneurs and housing sectors."

Following a series of meetings, the Bangladesh Association of Banks, the organisation of the private bank owners, and the ABB on March 3 pledged to lower the spread (difference between the rate of interest on deposits and the rate of interest on bank loans) by more than one percentage point on an average.

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